Stock Ownership Limitations

In order to protect the potential value of our tax benefits, PG&E Corporation’s and the Utility’s Amended Articles generally limit a person’s or entity’s (including certain groups of persons) percentage ownership of equity securities, as determined for U.S. federal income tax purposes, absent approval by the Board of Directors.

Notably, a person or entity’s percentage ownership for U.S. federal income tax purposes may differ significantly than such person or entity’s percentage ownership for other purposes. In our case, the calculation of a person or entity’s percentage ownership for purposes of the 4.75% ownership limitation in the Amended Articles may differ depending on whether the Fire Victim Trust is treated as a qualified settlement fund taxable as a separate entity or, alternatively, treated as a grantor trust for U.S. federal income tax purposes.

As PG&E Corporation has publicly disclosed, PG&E Corporation expects to elect for the Fire Victim Trust to be treated as a grantor trust since formation. If the “grantor trust” election is made, then any shares owned by the Fire Victim Trust will effectively be treated for purposes of the ownership limitation as if such shares were not outstanding, until such shares are sold by the Fire Victim Trust. Thus, for example, based on the total number of outstanding equity securities at March 31, 2021, and assuming the Fire Victim Trust has not sold any shares of PG&E Corporation’s common stock, a person’s effective percentage ownership limitation for purposes of the Amended Articles would be 3.6%. This percentage is expected to increase as the Fire Victim Trust sells PG&E Corporation’s common stock. This does not lower/alter the reporting thresholds for securities law purposes.


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